Rupiah weakens, stock extends losses
The Jakarta Post, Jakarta
The rupiah, having gained consistently in the past week, fell on Tuesday due to a combination of profit-taking and the U.S. dollar's rise against the region's major currencies, notably the Japanese yen.
The local currency, which strengthened by nearly 2 percent last week, closed lower at Rp 8,940 per dollar as compared to 8,840 the day before.
"(The rupiah's) recent rise has forced investors to engage in profit-taking actions, exacerbated also by the yen's decline to the dollar," a currency dealer said.
The local unit's weaker showing on Tuesday was the first in five consecutive trading days, halting its upward trend amid bullish sentiment stemming from the generally trouble-free presidential election.
Lack of fresh leads and concern about political uncertainty ahead of the second round of the presidential election have also dampened sentiment in the market, the dealer added.
A runoff is inevitable as no presidential candidate is likely to have secured the required 51 percent of the vote. The pairings of Susilo Bambang Yudhoyono-Jusuf Kalla and Megawati Soekarnoputri-Hasyim Muzadi are leading the pack with 33 percent and 26 percent respectively.
The market is keeping a close eye on coalitions likely to be formed between the two front runners and the losing candidates in the first round.
"Unless there is fresh news and incentives to the market, the political uncertainty will remain a drag on the sentiment," added the dealer.
In the share market, the composite index closed slightly lower on the back of extended profit-taking now that all the hype surrounding the July 5 election has begun to fade.
The index closed at 756.58 points, or 0.13 percent lower as compared to 757.57 the previous day with transaction volume of 761.72 million shares worth Rp 541.87 billion (US$61 million).
Telkom, the country's largest telecommunication firm, continued its recent fall, losing Rp 100 or 1.3 percent to close at Rp 7,450 on Tuesday, while Indosat closed unchanged at Rp 4,375.
Other decliners included state pharmaceutical company Kalbe Farma, which dropped by 1.2 percent to Rp 415 on profit-taking, while Bank Danamon fell 0.8 percent to close at Rp 2,975.
But cigarettemakers kept the index balanced with their gains.
Gudang Garam and HM Sampoerna, the country's top two cigarette producers, rose by 1.8 percent and 1 percent to close at Rp 14,550 and Rp 5,250 per share respectively.
The nation's biggest carmaker, Astra International, closed unchanged at Rp 5,650.